Securities regulators have beefed up the ability of investors to check registration and to examine the disciplinary histories of registered investment advisors, but there’s still room for improvement.
Regulators have long advised investors to protect themselves against fraud and other conduct risks by checking registration and doing their due diligence on prospective advisors. However, these simple tasks haven’t always been easy for investors, given the proliferation of provincial regulators, self regulators and other bodies.
As part of their efforts to promote March as Fraud Prevention Month, the Canadian Securities Administrators (CSA) are once again calling on investors to be proactive in protecting themselves from investment fraud by checking registration and examining advisors’ disciplinary histories, among other things.
To that end, the CSA has seemingly improved the resources it provides for this task. For example, the national registration search now contains the names of all individuals and firms that are registered in Canada. In the past, information for those registered with the Ontario Securities Commission (OSC) wasn’t available through the national registration search.
Moreover, its list of disciplinary actions against individuals also includes information from the self-regulatory organizations (the Investment Industry Regulatory Organization of Canada (IIROC), the Mutual Fund Dealers Association of Canada (MFDA), and la Chambre de la sécurité financière) and Quebec courts.
“Checking registration and asking questions when choosing a financial adviser are the first steps investors can take to avoid falling victim to investment fraud,” says Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission (ASC). “The relationship between adviser and investor is more than filling out forms or ticking boxes. There needs to be an ongoing conversation about the investor’s goals and how to meet them with suitable products, while communicating the risks that come with investing.”
However, there are still shortcomings in the resources provided by the CSA. Notably, the national registration search doesn’t provide historical registration conditions, which had been available through certain provincial regulator’s sites, such as the B.C. Securities Commission (BCSC). Additionally, current terms and conditions on registrations in Quebec are not available.
Also, the disciplinary information is not integrated with the registration search; which would make it easier for investors to do their research. And, the information provided is not consistent from province to province — disciplinary information is available from Alberta and B.C. as far back as 1987, but it’s available from 1997 in Ontario, and just since 2007 for various authorities in Quebec, and information from the courts is only available from Quebec.
Apart from these databases, the CSA website also offers a variety of free educational tools and resources for investors, which includes information on how to carry out background checks, what to ask when choosing an advisor, and how to work with advisors, including a publication from New Brunswick’s Consumer and Financial Services Commission that explains various fees that may be charged when working with advisors.
The CSA is also encouraging investors nationwide to participate in Check Registration Day on March 19. Investors are invited to visit www.aretheyregistered.ca to use the National Registration Search to see if investment individuals or firms are registered in a particular jurisdiction.